Writing for the Bank Innovation blog, Michael Gibbs, last week offered three stories from the major papers chronicling separate victories for the banking lobby. He concluded that by reasserting its strength, the lobby is showing how banks are regaining ground in the power struggle with federal regulators and thusly reviving themselves as drivers of economic growth. In other words, Gibbs is saying that a stronger banking lobby and stronger banks can get the economy back on track. But does that make sense?
There´s no question that banks´ interests have diverged significantly from the governments´ over the past few months (after being temporarily aligned, one could argue, during the early days of the credit crisis last fall). And now that the financial markets are no longer in acute crisis, bank lobbyists have room to oppose what they once accepted without argument, so perilous were their institutions´ conditions. But does a stronger bank lobby necessarily equal sounder financial institutions? And will bank lobbying wins actually translate into economic recovery and growth?
Logically, banks would try to do what was in their best interests, lobbyists would help clear a path to that action, and that action, since it was what the banks wanted, would lead to steady economic growth.
But in the wake of the crisis, those of us in the media should be taking a careful look at the things banks say are in their best interests. That logical allocution did not hold up so well during the subprime crisis, and to allow our scrutiny to snap back to the way it was before things started going south would mean we´re an incredibly near-sighted bunch.
The question of who knows best remains to be answered, but for now it would be prudent to think critically, rather than trust whichever voices can shout the loudest.